The Habicht Company was formed in 2006 to produce a single product. The production and sales for the next four years were as follows:

Required
1. Determine the gross profit for each year under each of the following periodic inventory methods:
a. FIFO
b. LIFO
c. Average cost (round unit costs to 3 decimal places)
2. Explain whether the company€™s return on assets (net income divided by average total assets, as we discussed in Chapter 6) would be higher under FIFO orLIFO.

Transcribed Image Text:

Production Sales 2006 2007 2008 2009 Units 100,000 120,000 130,000 130,000 Total Costs $200,000 234,000 247,000 240,500 Units 80,000 110,000 150,000 120,000 Sales Revenue $400,000 550,000 750,000 600,000 Units in Ending Invento 20,000 30,000 10,000 20,000